Quelpr
4 marksCosting and Break-Even Analysis

CAPE Management of Business Unit 2 · 2016 · Paper 2 · Question 2(a)

An air conditioning business needs to decrease operating costs to remain profitable and maintain production costs at a manageable level. The manager considers outsourcing a component and wants to establish indirect costs.

Differentiate between 'direct costs' and 'indirect costs'.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 2(b)Explain THREE factors that Edwards' Air Conditioning should consider in determining whether to make or buy the manufacturing component.[9 marks]
  2. 2(c)Discuss THREE reasons why it is important for Edwards' Air Conditioning to keep its production cost at a manageable level.[12 marks]

More practice: the rest of this paper · more Costing and Break-Even Analysis questions · all CAPE Management of Business Unit 2 past papers